Two economic reports published today on
the Irish economy by financial services' firms, provide contrasts in
outlook.

Friends First economist Jim Power's latest economic
outlook says the economy is too dependent on the surging housing market while
NCB Stockbrokers' economists Dermot O'Brien and Eunan King, say that the
population of the Republic will grow by 30% to over 5.3 million by 2020 with
immigrants accounting for a fifth of the population, maintaining housing output
at an annual average of 65,000 - more than a third of the UK's current annual
housing output.

Source: NCB report 2020 Vision

'There is no doubt that the economy is performing
strongly, but this performance is over reliant on the housing market which is
exerting an inordinate influence on the overall health of the Irish economy,'
Jim Power warned.

He said that a significant slowdown in housing would
have a substantial effect on consumer confidence and would undermine the overall
economy. He said the housing market was benefiting consumer spending,
construction employment, the stock market and the public finances, and this made
the economy vulnerable in the event of a downturn in the sector.

Power said economic growth would accelerate this year
with GDP expanding by 5.2% and GNP by 4.9%. He said that consumer spending was
back at Celtic Tiger levels, driven by rising salaries, the prospect of maturing
SSIA funds, the Government's expansionary budgetary policy and 'an incredible
willingness to borrow'.

'Consumer spending is on fire and there is strong
evidence of irrational exuberance,' said Power. He also warned that some people
who had been tempted into the property market were not prepared for the prospect
of higher interest rates.

Power says policy makers need to create a sustainable
indigenous economy by investing in marketing, research and product innovation.
Likening the economy to 'a bird flying on one wing', he said it could not grow
indefinitely based on the housing market and the public sector.

2020 Vision

NCB Stockbrokers' report called 2020 Vision- says the population of the
Republic will grow by 30% to over 5.3 million by 2020, and to six million by
2050. It says immigrants could account for a fifth of the population by
2020.

NCB economists Dermot O'Brien and Eunan King say the
population between the ages of 15 and 64 will rise by 700,000 in the next 15
years.

'Sustained strong growth in the labour supply will
maintain a capacity for growth in Ireland that will far outstrip that in other
EU countries where the demographic outlook is much less favourable,' the report
says.

NCB says that demand for pensions, mortgages,
insurance and other financial products will benefit, as will spending on travel
and leisure activities. The report estimates that the number of cars in the
country will almost double to three million by 2020, with car numbers in the
greater Dublin area rising to one million from the current 600,000.

NCB says housing demand may cool down, but should
still run at an average of 65,000 homes a year for much of the next 15
years.

Summary

- The
number of private cars in the state rose from 1 million in 1996 to 1.6 million
in 2004, a growth rate ofover 5% per annum. Most of this reflected an increase
in the number of cars per 1000 population.

- The rate of car ownership
in Ireland, at 391 per 1000 population in 2004, remained well below the level in
the UK (447in 2002) and the EU 15 (491in 2002).

- Since income per capita in
Ireland is now above that of the EU 15, it is to be expected that the trend rise
in rates of car ownership will continue.

- In simulating the possible size
of the car stock by 2020, we calculate the rise that, were there to be no change
in ownership per head of population, car numbers would rise to a total in 2020
of 2.1 million.

- If we project that the rate of
ownership rises at the 1999-2004 pace, the car stock would reach 3.3 million by
2020. This would, however, result in a level of ownership per 1000 population of
over 600, which would be above the current levels in the US.

- Our central estimate is
that the numbers of cars could reach 2 million by 2010 and 3 million by 2020.

- Car numbers in Dublin and
surrounding counties could rise from 0.6 million in 2004 to 0.8 million in 2010
and 1 million by 2015. - The rate of ownership in 2020 would be 558 per
1000 on this basis, above that of Germany but below the level in Italy in 2002,
which was then at the top of the range for the EU 15.

- Annual car registrations would be
about 170,000 to 200,000 per annum until 2015, on this basis and about 230,000
per annum until 2020.

- We doubt increased use of public
transport will materially affect this prospect. The 2002 Census shows that train
and bus were used by only 9% of workers as a means of travelling to work,
compared to 69% who used cars and other vehicles.

- Aggregate miles travelled to work
rose by over 10% per annum between 1996 and 2002, of which about 7% was
accounted for by a rise in individual journeys. About 86% of the aggregate
increase originated in towns (excluding cities) and rural areas. These journeys
are unlikely to be much affected by the proposed public transport initiatives in
the immediate years ahead.

- The
National Roads Authority projections are for the number of cars and light goods
vehicles to rise by 44% by 2020. Our estimates suggest that the number of cars
could rise by 89% by 2020. If correct, this could have significant consequences
for infrastructure relative to that in the NRA provisions.